c) MRP <=wage rate
d) MRP=wage rate
Answer
Answer: d) MRP=wage rate
QN41: The rate at which one input can be reduced per additional unit of the other input while holding output constant is measured by the
a) Marginal rate of substitution
b) Marginal rate of technical substitution.
c) Average product of the input
d) None of the given options
Answer
Answer: b) Marginal rate of technical substitution.
QN42: All of the following are determinants of supply except
a) Price
b) Income levels
c) objectives of the firm
d) Level of technology
Answer
Answer: b) Income levels
QN43: Demand function is given as Dx=f(Px, Pr,Y,T) What does T stand for
a) Taxes
b) Tastes
c) Both Taxes and Tastes
d) None
QN44: What kind of relationship exist between demand for a good and price of its substitute goods
a) Direct
b) Inverse
c) No effect
d) Can be direct or inverse
QN45: What kind of relationship exist between demand for a good and price of its complementary goods
a) Direct
b) Inverse
c) No effect
d) Can be direct or inverse
Answer
Answer: b) Inverse
QN46: Degree of responsiveness of demand to a change in any of its determinants is called
a) Elasticity of demand
b) Law of demand
c) Law of supply
d) Elasticity of supply
Answer
Answer: b) Law of demand
QN47: ___tells us about the, ‘direction’ of change in demand in response to a change in any of its determinants; it, however does not tells us anything about the ‘magnitude’ of change
a) Law of demand
b) Demand function
c) Both
d) None
Answer
Answer: b) Demand function
QN48: The value of elasticity coefficient varies between zero and ___
a) Infinity
b) one
c) Both
d) None
Answer
Answer: a) Infinity
QN49: Elasticity of supply is defined as the ___of percentage change in quantity supplied and the percentage change in the price of the commodity
a) Ratio
b) Addition
c) Multiplication
d) None of the above
QN50: Perishable goods cannot store and thus, entire stock of such goods must be disposed of within very short period, whatever may be price. Hence the nature of supply of such goods is –
a) Elastic
b) inelastic
c) unitary elastic
d) none
Answer
Answer: b) inelastic
QN51: In Marginal utility theory, utility is an
a) Ordinal concept
b) Cardinal concept
c) Both ordinal and cardinal concept
d) None of the above
Answer
Answer: b) Cardinal concept
QN52: MU of the commodity becomes negative when TU of the commodity is
a) Rising
b) Constant
c) Falling
d) zero
Answer
Answer: c) Falling
QN53: Falling MU shows which law
(a) Law of diminishing returns
(b) Law of diminishing marginal rate of substitution
(c) Law of diminishing marginal utility
(d) None of the above
Answer
Answer: (c) Law of diminishing marginal utility
QN54: Slope of TU curve is called
a) rginal utility
(b) Utility
(c) Average utility
(d) None
Answer
Answer: a) rginal utility
QN55: Indifference mean
a) X is preferred to Y
(b)Y is preferred to X
c) X and Y are equally preferred
(d) None
Answer
Answer: c) X and Y are equally preferred
QN56: Higher Indifference curve means
(a) Consumer has more income
(b) Price of goods have reduced
(c) Higher utility level
(d) All of the above
Answer
Answer: (c) Higher utility level
QN57: MRS is given by
a) ? X/ ? Y
b) ? X- ? Y
c) ? Y/ ? X
d) ? Y- ? X
Answer
Answer: c) ? Y/ ? X
QN58: When tax is raised, consumer surplus
a) Falls
b) Rises
b) Remain unchanged
d) Becomes Zero
QN59: Consumer surplus is the difference between
a) amount consumer is willing to pay minus amount actually paid by the consumer
b) Amount consumer actually paid minus the amount consumer is willing to pay
c) Amount consumer actually paid minus the amount charged by the seller
d) Amount consumer is willing to pay minus the amount producer is wanting
Answer
Answer: a) amount consumer is willing to pay minus amount actually paid by the consumer
QN60: The common assumption of marginal utility and indifference curve theories is
a) Consistency
b) Transitivity
c) Rationality
d) More is better
Answer
Answer: c) Rationality
QN61: Factors of production can be
a) Land
b) Labour
c) Organisation
d) All of the above
Answer
Answer: d) All of the above
QN62: Production function means
a) Physical relationship between inputs used and output
b) Technical relationship between inputs used and output
c) Financial relationship between inputs used and output
d) Both physical and technical relationship between inputs used and output
Answer
Answer: d) Both physical and technical relationship between inputs used and output
QN63: Short -run production function means
a) At least one factor is in fixed supply
b) Two factor are in fixed supply
c) All factors are in fixed supply
d) One factor is in variable supply
Answer
Answer: a) At least one factor is in fixed supply
QN64: Law of variable proportion holds when
a) State of technology is same
b) All units of variable factor are homogeneous
c) There is at least one fixed factor
d) All of the above
Answer
Answer: d) All of the above
QN65: Returns to scale occur
a) In the long-run
b) When all inputs are increased
c) When the increase in inputs is in the same proportion
d) All of the above
Answer
Answer: d) All of the above
QN66: Cost of next best alternatives opportunity given up is called
a) Outlay cost
b) Opportunity cost
c) Explicit Cost
d) Implicit Cost
Answer
Answer: b) Opportunity cost
QN67: Fixed cost is also called
a) Sunk cost
b) Supplementary cost
c) Overhead Cost
d) All of the above
Answer
Answer: d) All of the above
QN68: MC curve is ___ shaped
a) L-shaped
b) Straight line
c) U -shaped
d) Inverse S-shaped
Answer
Answer: c) U -shaped
QN69: Long-run AC curve is also called
a) Planning curve
b) Envelop curve
c) Cost frontier
d) All of the above
Answer
Answer: d) All of the above
QN70: Total cost at zero level of output will be= ___
a) TFC
b) TVC
c) AC
d) AFC
QN71: Homogenous product exists under
a) Perfect Competition
b) Monopoly
c) Monopolistic Competition
d) All of the above
Answer
Answer: a) Perfect Competition
QN72: One seller exists under
a) Perfect Competition
b) Monopoly
c) Monopolistic Competition
d) All of the above
Answer
Answer: b) Monopoly
QN73: Monopolistic competition means
e) Large number of sellers
b) Product differentiation
c) Free entry and exit of firms
d) all of the above
Answer
Answer: d) all of the above
QN74: Homogenous product means product are
a) Perfect substitutes
b) Identical
c) Cross elasticity between products is infinity
d) All of the above
Answer
Answer: d) All of the above
QN75: Discriminating monopoly means
a) Different prices are charged
b) Consumers might be same or different
c) Commodity is same
d) All of the above
Answer
Answer: d) All of the above
QN76: What brings about pure competition
a) Large number of buyers and sellers
b) Homogenous product
c) Free entry and exit of firms
d) All of the above
Answer
Answer: d) All of the above
QN77: Who coined the term monopolistic competition
a) Chamberlin
b) Joan Robinson
c) Robbins
d) Marshall
Answer
Answer: a) Chamberlin
QN78: What is the basic principle of all market conditions
a) A firm should produce only if TR>TC
b) To maximise profit, firm must produce where MR=MC
c) Slope of MC should be more than slope of MR
d) All of the above
Answer
Answer: d) All of the above
QN79: In economics, ___measures the payments that flow between any individual country and all other countries
(a) Exchange Rate
(b) BOP
(c)Both of the above
QN80: A term commonly used to refer to a central banks operations which mitigates the two potentially undesirable effects of inbound capital (currency appreciation and inflation) is-
(a) Sterilisation
(b) Open market operations
(c) Exchange Rate
(d) none
Answer
Answer: (a) Sterilisation
QN81: Average product is defined as–
a) Total cost divided by the total units of input
b) Total output divided by the total units of input
c) Total cost divided by total output
d) Total output divided by total cost of input
Answer
Answer: b) Total output divided by the total units of input
QN82: To manufacture a PC, you require a keyboard and a monitor. If you measure keyboard on the X-axis and monitor on the Y-axis, the shape of the Isoquant will be–
a) Convex to the origin
b) Concave to the origin
c) Downward sloping straight line
d) Upward sloping straight line
e) L-shaped
Answer
Answer: d) Upward sloping straight line
QN83: The intersection of marginal product curve and average product curve characterizes the point of–
a) Maximum profit
b) Maximum total product
c) Maximum average product
d) Maximum marginal product
Answer
Answer: c) Maximum average product
QN84: The average total cost will be minimum at a point where–
a) Marginal cost and average fixed cost curves intersect
b) Marginal cost and average variable cost curves intersect
c) Marginal cost and average cost curves intersect
d) Marginal cost is minimum
Answer
Answer: c) Marginal cost and average cost curves intersect
QN85: Average fixed cost–
a) Always declines as the output increases
b) Is U-shaped, if there are increasing returns to scale
c) Is U-shaped, if there are decreasing returns to scale
d) Is intersected by marginal cost at its minimum point
e) None of the above
Answer
Answer: a) Always declines as the output increases
QN86: Which of the following cost curves is also called planning curve
a) Long run total cost curve
b) Long run average cost curve
c) Long run marginal cost curve
d) Total fixed cost curve
Answer
Answer: b) Long run average cost curve
QN87: Economic profit is–
a) Accounting profit + Implicit cost
b) Accounting profit + Implicit cost+ Explicit cost
c) Accounting profit – Implicit cost
d) Accounting profit -Indirect costs
Answer
Answer: c) Accounting profit – Implicit cost
QN88: The intersection of the marginal cost curve and the average cost curve characterizes the point of–
a) Maximum profit
b) Minimum average cost
c) Minimum marginal cost
d) Minimum opportunity cost
Answer
Answer: b) Minimum average cost
QN89: Which of the following costs remain constant as the output increases
a) Marginal cost
b) Average variable cost
c) Average fixed cost
d) Total variable cost
e) None of the above
Answer
Answer: e) None of the above
QN90: Increasing marginal costs with increase of output implies–
a) Decreasing average returns
b) Decreasing average fixed costs
c) Decreasing average variable costs
d) Decreasing total costs
Answer
Answer: b) Decreasing average fixed costs
QN91: Which of the following cost curves is not ‘U’ shaped
a) Long run average cost curve
b) Long run marginal cost curve
c) Short run average cost curve
d) Average variable cost curve
e) Average fixed cost curve
Answer
Answer: e) Average fixed cost curve
QN92: What would be the shape of the total cost curve when a manufacturing unit is experiencing economies of scale
a) Upward sloping
b) Rectangular hyperbola
c) U-shaped
d) Inverted U-shaped
Answer
Answer: a) Upward sloping
QN93: In perfect competition, a firm maximizing its profit will set its output at that level where–
a) Average variable cost = price
b) Marginal cost= price
c) Fixed cost= price
d) Average fixed cost= price
Answer
Answer: b) Marginal cost= price
QN94: It is advisable for a firm operating under perfect competition to shut down in the short run when the price of the product falls below the–
a) Total cost
b) Fixed cost
c) Average variable cost
d) Semi-fixed cost
Answer
Answer: c) Average variable cost
QN95: In the long run, a perfectly competitive firm earns only normal profits because of —
a) Product homogeneity in the industry
b) Larger number of sellers and buyers in the industry
c) Free entry and exit of firms in the industry
d) Both (a) and (b) above
Answer
Answer: c) Free entry and exit of firms in the industry
QN96: The doctrine of invisible-hand applies to economies in which all the markets are–
a) Demand specific
b) Supply specific
c) Imperfectly competitive
d) Perfectly competitive
Answer
Answer: d) Perfectly competitive
QN97: The horizontal demand curve for a firm is one of the characteristic features of-
a) Oligopoly
b) Monopoly
c) Monopolistic competition
d) Perfect competition
Answer
Answer: d) Perfect competition
QN98: A perfectly competitive firm can increase its sales revenue by–
a) Reducing the price
b) Increasing the price
c) Increasing the production
d) Increasing the expenditure on advertising
Answer
Answer: c) Increasing the production
QN99: If a perfectly competitive industry is an increasing cost industry, the demand curve faced by a firm will be–
a) Upward sloping
b) Downward sloping
c) A horizontal straight line
d) A vertical straight line
Answer
Answer: c) A horizontal straight line
QN100: A perfectly competitive firm earns abnormal profits when its–
a) Average cost curve lies above its demand curve
b) Average revenue curve is tangent to average cost curve
c) Demand curve lies above the average cost curve
d) Marginal revenue curve lies above the average cost curve
e) Both (c) and (d) above.
(Note: A perfectly competitive firm earns abnormal profits when its demand curve and marginal revenue curve lies above the average cost curve as the demand curve and marginal revenue curve is the same for a perfectly competitive firm. Answer (c) and (d) above, a perfectly competitive firm earns abnormal profits)
Answer
Answer: e) Both (c) and (d) above.
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